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Text | Tian Zhe

Editor | Li Qin and Yang Xuan

36Kr Auto has exclusively learned that as of early July this year, the revenue of Huawei's Intelligent Automotive Solutions BU will reach 10 billion yuan in 2024.

Compared with previous years, Huawei's automotive BU revenue has doubled. Huawei's annual report shows that in 2022-2023, Huawei's automotive BU's annual revenue will be 2.1 billion and 4.7 billion yuan respectively. The revenue of Huawei's automotive BU in just half a year exceeds the total of the past two years.

36Kr Auto contacted Huawei to verify the news. Huawei responded that when it comes to financial report information, it is recommended to refer to the official authoritative information.

Huawei's Automotive BU was established in May 2019 and is positioned as a supplier of incremental components for intelligent connected vehicles, providing OEMs with product solutions such as intelligent driving and Hongmeng cockpit.

Huawei's automotive BU revenue has increased significantly, mainly due to its major customer, Seres. In the first half of 2024, a total of 194,200 vehicles were delivered, of which Huawei and Seres cooperated onAsk the worldThe delivery volume was approximately 190,000 vehicles, accounting for more than 90%.

However, Huawei's automotive BU's revenue has surpassed most Tier 1 companies. For example, Horizon Robotics, a leading intelligent driving company, had annual revenue of 1.55 billion yuan in 2023, accounting for only one-third of Huawei's automotive BU's revenue in the same period.

At present, domestic OEMs are caught in a fierce battle to reduce costs, and almost all Tier 1s are forced to reduce their profit margins to keep up with the pace of price cuts. "Some car company customers require a 20% cost reduction every year," an industry insider told 36Kr Auto.

In the industry wave of extreme cost reduction, even though Desay SV has dozens of customers around the world, its annual revenue only broke through 20 billion yuan for the first time in 2023.

Huawei's automotive BU has grown against the trend, proving its self-sustaining capabilities.Changan AutomobilePreviously, an announcement was released that Huawei's automotive BU will be split before September this year and become a joint venture between Huawei and Changan. At this time, the half-year revenue reached 10 billion yuan, which will relieve a lot of financial pressure for Huawei's automotive BU to become independent in the future.

Wenjie's production and sales increased by 600% year-on-year, and the automotive BU turned losses into profits in three months

Huawei's Automotive BU was once Huawei's only loss-making business. Huawei's executive director and chairman of the Intelligent Automotive Solutions BU, Richard Yu, once said that Huawei's Automotive BU would lose about 6 billion yuan in 2023, but in the first quarter of this year, the business has achieved profitability. It took only three months for Huawei's Automotive BU to turn losses into profits.

The new M7 to be released in the second half of 2023,QJM9, are the two major engines of revenue growth for Huawei's Automotive BU. Three months after launch, the two models received orders exceeding 120,000 and 70,000 units respectively, becoming the top sellers in their respective market segments.

The hot sales of Wenjie have maximized the production capacity of Seres. The production and sales report released by Seres from January to June 2024 shows that the average monthly production and sales of Seres cars increased by about 600% year-on-year, of which the sales of Wenjie models accounted for more than 90%.

However, the revenue of 10 billion yuan is still not enough to support the independent operation of Huawei's automotive BU.

Huawei's annual report shows that as of 2022-2023, Huawei's automotive BU's cumulative R&D investment was US$3 billion and RMB 30 billion, respectively. It is estimated that Huawei's automotive BU's R&D investment in 2023 will be close to RMB 10 billion.

The high sales of the M7 can be attributed to Huawei's leading intelligent driving solution. Yu Chengdong once said that among the 100,000 orders for the new M7, more than 60% of users chose the intelligent driving version, and the NCA option rate in urban areas reached 75%.

This year, the end-to-end intelligent driving big model has become a new point of contention for intelligent driving. Huawei must improve the generational differences in intelligent driving technology to ensure its technological advantage. Huawei has increased its investment in intelligent driving, and its intelligent driving ADS training computing power has been increased to 3.5EFLOPS.

Huawei's Automotive BU has achieved a new milestone in revenue, but due to high R&D costs, there is still room for further tapping into more revenue and ensuring long-term operations.

Huawei's Automotive BU strengthens its independence

Although Huawei's automotive BU has achieved profitability in the first half of the year, it remains cautious about team expansion.

36Kr Auto learned that the vast majority of Huawei's automotive BU teams in Shanghai, Hangzhou, Suzhou, Shenzhen, etc., are only open to internal transfers and recruitment of OD (informal staff), and very few teams are open to social recruitment.

A person close to Huawei's automotive BU said that the automotive BU is still short of staff, and the number of people leaving some departments is greater than the number of people joining.

He explained that the Automotive BU was about to become independent and that the company was conducting a semi-annual performance evaluation. Other colleagues were worried about the poor performance indicators after joining the Automotive BU and were hesitant. At the same time, due to the increase in projects, the workload increased dramatically, so some Automotive BU colleagues were transferred to other departments.

However, he said that the car BU had promised to start expanding once it became independent, and the size of some teams would double.

Last November, Changan Automobile issued an announcement on the signing of the "Memorandum of Investment Cooperation", announcing that it had negotiated with Huawei to split the car BU and inject it into the joint venture between Huawei and Changan. According to the agreement, Changan Automobile intends to invest no more than 40% in the joint venture.

In addition to Changan Automobile, Huawei is also actively inviting other car companies to invest in the joint venture.East Wind,Guangzhou AutomobileThe two car companies also expressed their willingness to invest.

Dongfeng, GAC and Huawei have in-depth cooperation.Dongfeng MotorTwo brandsLantu、WarriorCooperating with Huawei in the "HI Mode", the two brands' models will adopt a full set of intelligent solutions provided by Huawei, such as sensing devices such as LiDAR, and high-performance computing platforms;GAC TrumpchiMany of its models will adopt Huawei's Qiankun Intelligent Driving, Hongmeng Cockpit and other technical solutions, and the first cooperative model will be launched in 2025.

The independence process of Huawei's automotive BU is not smooth. The "Investment Cooperation Memorandum" shows that the final transaction documents are expected to be signed in May 2024 to facilitate the independence of Huawei's automotive BU. After that, Changan Automobile announced a three-month extension, postponing the signing time of the documents to no later than August 31.

You Zheng, member of the Standing Committee of the Party Committee and deputy general manager of Dongfeng Motor Group Co., Ltd., said in March this year that the company is cooperating with FAW Group to consider participating in Huawei's intelligent vehicle solution business, and it is expected to reach a preliminary conclusion in June. At present, Dongfeng Motor has not announced any relevant progress.

A person close to Huawei's automotive BU told 36Kr that Dongfeng has been in contact with Huawei for a long time and is determined to establish a joint venture. Since some teams of GAC overlap with Huawei's automotive BU team, they are still considering how to coordinate the work of their own research and development team with Huawei's automotive BU team after the establishment of the joint venture.

According to the announcement time, Huawei Automotive BU is less than two months away from becoming independent. Currently, Huawei Automotive BU has made various preparations for independence to improve the team's flexibility.

Since January this year, Huawei has established Yinwang Intelligent Technology Co., Ltd. in Shenzhen, Shanghai, Dongguan, Nanjing, Suzhou and other places to take over the employees of Huawei's independent automotive BU. In addition, all new employees who join Huawei's automotive BU have signed contracts with Yinwang Intelligent.

In order to maintain independence, Huawei's Automotive BU Shanghai team will not move with Huawei's Shanghai Research Institute to the Qingpu R&D Center, but will continue to work in Jinqiao, Pudong.

Huawei is ready to split its car BU, and the existing projects will allow Huawei's car BU to store more ammunition. Based on the two smart car brands, Wenjie and Zhijie, Huawei will successively releaseBAIC、CheryThe cooperative smart car models are Xiangjie S9 and Zhijie R7, and the two models are expected to be priced at 400,000 and 300,000 yuan or more respectively.

Regarding the independent Huawei Automotive BU, Yu Chengdong once said that it will become an open platform for electrification and intelligence in which the automotive industry can participate. Huawei Automotive BU not only gets rid of the constraints of Huawei brand, making the cooperation model more diversified, but also as an open platform, OEMs may weaken Huawei's presence in product promotion to avoid Huawei's technology halo overshadowing OEMs, thus facilitating the new company to cooperate with more OEMs.

By then, Huawei's automotive BU will have greater flexibility in cooperation, and its revenue may increase accordingly. The result will be clear in 2025.